Philips profit skids despite good sales

Philips said its net income fell to 720 million euros ($1.14 billion), down from 1.57 billion euros in the same quarter last year.

Sales rose 6 percent to 6.46 billion euros ($10.23 billion), driven by sales of lighting and televisions in emerging markets that were boosted by viewer interest in the Euro2008 football championship. Sales beat analysts' expectations of 6.35 billion euros.

Chief Executive Gerard Kleisterlee said in a statement that sales showed "the quality and the resilience of our overall business portfolio in a rapidly deteriorating macro-economic environment."

Analysts applauded the report as generally positive. "The company has released a fairly decent set of results given the economic circumstances," said Jurgen Smits van Oyen of Petercam, which upgraded its recommendation from Hold to Add. "The results should take away further worries with regard to Philips running into major problems."

Philips said a 440 million euro drop in net income reflecting last year's gains from the disinvestment in Taiwan Semiconductor Manufacturing Co. Ltd. and a 299 million euro ($473 million) impairment charge for NXP semiconductors.

Philips' share price rose 6.4 percent to 20.67 euros ($32.95) on the Euronext exchange. The price has dropped nearly 30 percent since the start of the year.

Sales of lighting and televisions were particularly strong in Latin America, Eastern Europe and India, pushing emerging market sales up by 16 percent, said Chief Financial Officer Pierre-Jean Sivignon.

An uptick in TV sales was welcome news coming after a disappointing first quarter and falling prices and Sivignon said the Consumer Lifestyle division performed well as a whole. He said Philips had met its target to clear some of its inventory to make way for new products.

Lighting was up 6 percent, with a 16 percent increase in energy-saving systems, though sales softened in North America and Europe, he said.